David Cameron has bowed to pressure to hold public inquiries into the "absolutely disgusting" allegations of phone hacking by journalists at News of the World, and into the original police investigation into the scandal.

Pressed by the Labour leader, Ed Miliband, to conduct a full public inquiry, the prime minister said he was appalled by the revelations and agreed it was important inquiries were conducted that were "public, independent, and have public confidence".

He also signalled that News Corporation's takeover of BSkyB would be allowed to go ahead. He rejected Miliband's call for the matter to be referred to the Competition Commission, which he suggested would be illegal.

Miliband told Cameron he had made a "catastrophic error of judgment" when he hired Andy Coulson as his director of communications.

In a dramatic prime minister's question time dominated by the hacking scandal, Miliband also accused Cameron of being out of touch with public opinion on the issue of BSkyB and of a "failure of leadership" in the biggest press scandal in modern times.

Cameron told the Commons the inquiries could not be started immediately because of the major police investigation currently under way, though he conceded it "may be possible" to start some of the work earlier.

"We do need to have an inquiry, possibly inquiries, into what has happened," Cameron said. "We are no longer talking here about politicians and celebrities, we are talking about murder victims, potentially terrorist victims, having their phones hacked into.

"It is absolutely disgusting, what has taken place, and I think everyone in this house and indeed this country will be revolted by what they have heard and what they have seen on their television screens."

He said there were two "vital areas" that needed to be considered: why the original police inquiry failed to "get to the bottom of what happened", and the behaviour, practices and ethics of journalists and media organisations.

Cameron said it was important that lessons were learned from "what has become a disgraceful episode".

The Labour leader called on Cameron to appoint a senior figure, possibly a judge, to lead the inquiry, which he said should have the power to call witnesses under oath.

Miliband said the investigation should cover "the culture and practices of the industry, the nature of regulation ... and also the relationship between the police and the media".

Cameron said he did not think it would be possible to investigate the original police inquiry until the new one had concluded.

"Clearly, we can't start all that sort of inquiry immediately because you must not jeopardise the police investigation, but it may be possible to start some of that work earlier," he said.

He offered to hold talks on the matter with other party leaders, the attorney general, Dominic Grieve, and the cabinet secretary, Sir Gus O'Donnell.

But he resisted separate calls by Miliband for the bid by News International to take over BskyB to be referred to the Competition Commission, saying to do so would be illegal.

Miliband said the public would react "with disbelief" if the deal went ahead in the next few days when News International was the subject of a major criminal investigation.

However, Cameron said the government had followed the correct legal processes, with Jeremy Hunt, the secretary of state for media, culture and sport, handling the matter in a quasi-judicial role. Cameron said: "On the issue of BSkyB, what we have done here is followed absolutely to the letter, the correct legal processes. That is what the government has to do."

He added: "I note that the leader of the Labour party said yesterday that the issue of competition and plurality is a separate issue from the very important issue we are discussing today. What I would say is these processes must be followed properly, including by Ofcom, and it is Ofcom that have the duty to make a recommendation about fit and proper person. Those are the right processes. This government will behave in a proper way."

The prime minister refused to be drawn on whether Rebekah Brooks, News International's chief executive, should stand down. Confronted by claims by Miliband that he had made a "catastrophic error of judgment" by taking on Coulson, the former editor of the News of the World embroiled in the latest wave of revelations, the prime minister said he took "full responsibility" for everyone he employed and appointed to work for him.

The ramifications of the scandal continued to be felt by the News of the World through other channels as Halifax bank and Virgin Holidays cancelled adverts due to run in this Sunday's paper. Ford said on Tuesday it was suspending its advertising in the paper. Other companies, including the UK's biggest advertiser, Procter & Gamble, have said they are reviewing their positions amid an online campaign urging firms to withdraw their advertising.

While News International issued a statement welcoming MPs' calls for a wide-ranging public inquiry into standards in the media industry to address public concerns, the broadcasting regulator Ofcom said it was monitoring the situation "and in particular the investigations by the relevant authorities into the alleged unlawful activities".

Ofcom said: "In the light of the current public debate about phone hacking and other allegations, Ofcom confirms that it has a duty to be satisfied on an ongoing basis that the holder of a broadcasting licence is 'fit and proper'."

The Metropolitan police commissioner, Paul Stephenson, also revealed that members of his force faced investigation after it was reported on Tuesday night that News International had handed over details of payments made by the News of the World to police officers. He said the documents appeared to "include information relating to alleged inappropriate payments to a small number of [Metropolitan police] officers".

Stephenson said the matter would be investigated by the deputy commissioner Sue Akers in conjunction with the Met's Directorate of Professional Standards. He added that no senior officer had been implicated. Given that the reports relate to police payments allegedly made between 2003 and 2007, when Coulson was editor, many commentators have suggested they are an attempt to relieve the pressure on Brooks, also a former editor.

He told BBC Radio 4's Today programme: "I'd really like to meet him face to face and have a very in-depth conversation with him about responsibility and the power that he has and how it should be used appropriately."

Simon Greenberg, director of corporate affairs at News International, told the Today programme that a meeting between Foulkes and Murdoch was "certainly something we would consider". Greenberg insisted that News International was being "highly co-operative" with the police.

In an interview with BBC Radio 5 Live, he said the organisation was "very close" to discovering who commissioned the alleged hacking of Milly Dowler's phone. Asked whether he was clear that the hacking was not commissioned by Brooks, who was News of the World editor at the time, he said: "We are clear."

About this article

Phone hacking: David Cameron bows to calls for public inquiries

This article was published on
the Guardian website
at 09.43 EDT on Wednesday 6 July 2011.
It was last modified at 11.00 EDT on Tuesday 20 May 2014.
It was first published at 08.17 EDT on Wednesday 6 July 2011.